Holgate Brewhouse launches equity crowdfunding campaign

Victoria’s Holgate Brewhouse is the latest brewery to launch an equity crowdfunding campaign, and is hoping to raise $1 million or more if its expression of interest phase is successful.

Holgate Brewhouse is gauging interest with potential investors over the next month. If the campaign whips up enough interest, then the brewhouse will look for more than $1 million when it launches its round on equity crowdfunding platform Birchal.

Paul Holgate, co-founder with wife Natasha, said that if successful, the funding would be used to complement existing expansion. Brewing capacity has already grown exponentially in the past year with a “state-of-the-art” brewhouse.

“There are lots of things we’d like to do in terms of increasing our capacity a with a canning machine, larger fermenters, solar panels – we’ve got a beautiful new building we’ve just completed and the roof space is begging to be covered with panels,” Holgate said.

“Some of our biggest costs are refrigeration so it would be great to see our beer made entirely with power from the sun, and to reduce our reliance on coal.”

“My dad was a bit of a risk-taker and he stuck his neck out. ‘Who dares wins’ was his favourite motto, so we were inspired by my parents and how they took risks with this and everything else we do,” Holgate explained.

He said he’d first become aware of equity crowdfunding on a trip to the UK, visiting Camden Town Brewery as it was undergoing a round.

“We looked into it when we arrived back in Australia, but at the time we were not allowed to do it over here.

“We still embarked on the expansion project we’d planned and submitted our plans to the council for the new building, but we did more through loans and government grants and so on.

“Since the [equity crowdfunding] legislation come about, we resurrected the idea, it’s a great way to raise money.”

He said the benefits to investors of taking a stake in Holgate Brewhouse would be that it already has assets.

“One of the key differences between Holgate and others is that we’ve got something unique.

“We do hold the freehold to the site and have an historic hotel, so we have two different incomes and business models operating under the one umbrella.

“We’ve got the traditional hotel that doubles as a taproom, which has become a tourist destination in a fantastic little wine region, as well as a big production brewery with 5 million litre capabilities.

“Another thing is that we’ve already done all the hard work in terms of our total expansion project. We’ve already built a brand new building, and have a state-of-the-art-brewhouse and bottling machine, we’re well on the way in terms of expansion.”

The funding will be used for additions to the existing production equipment, rather than essential equipment or startup costs, he said.

“Purchasing a canning machine wasn’t on our [essentials] list – our sales are heavily geared towards bottles – but where the market is at the moment with cans it’s appropriate to look at canning.”

He said Holgate Brewhouse’s brewing philosophy and investment in machinery is also a major advantage and a benefit to potential investors, who may be sceptical in the wake of some high profile crowdfunding failures over in the UK, like that of Redchurch or closer to home, the collapse this week of equity crowdfunded Sash, a sushi-pizza restaurant in Melbourne.

“For investors, what is unique to Holgate is my philosophy which has been to invest in high-tech highly-efficient European equipment which provides efficiencies in scale, machinery and operations.

“Many years ago we identified the need to compete with big brands and the craft brands coming out of the US. To stay relevant and to be price competitive we need to ensure we run an efficient operation.

“In Australia we get a lot of manual equipment cheaper out of China. This equipment is geared towards what they have an abundance of – cheap labour.

“We’ve been doing this for 20 years and I’ve found that we’re more like Europe in that our labour is expensive, in this industry it makes sense to go for more automated European equipment.”

The reality of crowdfunding

While it’s still early days for Holgate Brewhouse’s equity crowdfunding campaign, Holgate said the process has certainly preoccupied the team.

“It is bit onerous in terms of mine and other people’s time. We’ve been utilising our marketing personnel to help with the project and we’re doing a big campaign around social media.

“Providing all the right information to Birchal has been a big thing. There’s a lot of legislation around it and we rely on companies like Birchal to cross all the t’s and dot the i’s to make sure it’s done properly and above board.”

The next stage is providing more detailed financials to Birchal and any potential retail investors.

“We’re at this expression of interest phase so we’re outlining who we are and what we want to do, so people can register their interest.”

Holgate said that fans would be able to contribute from $250 upwards, and they would do a combination of reward crowdfunding too with incentives – though this is still being worked out.

One of the major benefits of an equity crowdfunding campaign is the exposure it can give to a company, and it’s something Holgate said the team were very aware of when getting started with their campaign.

“From the early days, we’ve been a production-driven company and that’s where my strength and forte lies – in making beer.

“We haven’t done a lot of marketing over the years compared to startup brands now, and we’ve been successful in organic word of mouth growth.

“But with the amount of noise in the marketplace now we for sure see crowdfunding as a great marketing exercise and way to engage with our fan base.”

The expression of interest phase for Holgate Brewhouse’s crowdfunding campaign will be completed in the next month, and if enough interest is stirred up, then the campaign could be launched in earnest by October.

Investors will be able to buy a stake in the brewing and wholesale business, as well as the hospitality and tourism side which includes the freehold and business of their historic hotel, accommodation, bar, restaurant and soon-to-open brewery experience, visitor centre and taproom.